Vote of Confidence: 36 Banks Giving $4.3B In Credit To AIG

While its chief executive declared that it can "see the finish line," American International Group Inc. proved it can raise money from private investors by signing $4.3 billion in private-sector loan agreements.

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While its chief executive declared that it can “see the finish line,” American International Group Inc. proved it can raise money from private investors by signing $4.3 billion in private-sector loan agreements.

The credit is considered a big step for the New York-based insurer, which is trying to carry out a plan to repay a massive government bailout in September 2008.

More than 35 banks participated in the credit lending that includes a three-year facility and a 364-day facility at $1.5 billion each as well as a one-year $1.3 billion facility marked for Chartis, AIG’s property and casualty unit.

“This success is another important vote of confidence by the market in AIG,” said Robert Benmosche, chief executive officer, in a statement. Shares in the company, which during the past year have been as low as about $21.50 each, rose sharply on Dec. 27 and were trading at around $60 early on Dec. 28.

The credit facilities along with other recent moves “demonstrate that AIG has momentum and has made substantial and impressive progress this year,” Mr. Benmosche added.

In the last six months, AIG raised $27 billion in cash by selling subsidiary American Life Insurance Company (ALICO) and from an initial public offering of its unit AIA Group Ltd. in Hong Kong. The funds will be used to repay a line of credit to the Federal Reserve Bank of New York.

In September, AIG said the sale of AIG Star Life Insurance Company and AIG Edison Life Insurance Company to Prudential Financial Inc. for $4.3 billion, should close early in 2011.